Core sector output hit three-month low in September

New Delhi: India’s core infrastructure sector growth eased to a three-month low in September, with output rising 3% year-on-year, provisional data from the commerce ministry showed on Tuesday.

Growth in the core infrastructure sectors had climbed to 6.5% in August, revised up from 6.3% earlier. In September 2024, growth was 2.4%.

The eight core sectors—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity—together make up over two-fifths of the country’s industrial output.

In September, growth contracted in four of these sectors—coal, crude oil, natural gas, and refinery products—while fertilisers, cement, and electricity saw their output slowing.

Steel stood out as the only sector to register annual growth in September, outperforming its performance from the previous month.

Coal production contracted 1.2% in September, a sharp drop from the 11.4% growth recorded in August.

Crude oil output fell 1.3% during the month, compared with a 2.4% increase in August.

Natural gas production declined 3.8%, worsening from a 2.2% contraction in the previous month.

Refinery products fell 3.7% in September, reversing the 3% growth seen in August.

Fertiliser output grew 1.6%, down from 4.6% in August, while cement production edged up 5.3%, slightly below last month’s 5.4% rise.

Electricity generation rose 2.1%, lower than the 4.1% growth in August.

Steel remained the standout performer, with output increasing 14.1% in September, up from 13.6% in the previous month.

Economists said that steel continued its robust double-digit expansion, preventing the overall performance of core industries from weakening further during September.

“The core sector growth remained volatile in September 2025, dipping to a three-month low of 3.0%, dampened by a contraction in half its constituents,” said Aditi Nayar, chief economist at ICRA India.

“Overall, mining and quarrying, and electricity GVA (Gross Value Added) growth is likely to be weak in Q2 FY26,” she added.

GVA is a measure of economic productivity that quantifies the contribution of a producer, industry, sector, or region to the overall economy.

GVA expresses the value of goods and services produced in a country, after deducting the cost of all inputs, raw materials, and intermediate consumption directly associated with that production.

Industrial strain

Broader industrial activity in the country has shown signs of strain recently.

India’s industrial production grew 4% in August, dropping from the month prior, driven largely by stronger performance in the mining sector, government data released last month showed.

The Index of Industrial Production (IIP) for July was revised upward to 4.3% from the earlier estimate of 3.5%. In contrast, industrial activity was flat in August 2024.

The official industrial production figures for September will be published later this month.

Private surveys also suggest a challenging picture for manufacturing.

India’s manufacturing engine lost momentum in September, cooling from a 17-year high the previous month and expanding at its slowest pace in four months, according to the HSBC India Manufacturing Purchasing Managers’ Index (PMI).

The HSBC India Manufacturing PMI compiled by S&P Global eased to 57.7 in September from 59.3 in August and 59.1 in July. That compares with 58.4 in June, 57.6 in May, and 58.2 in April.

The strain on industrial activity comes alongside external pressures. The US, accounting for roughly 17% of India’s exports, imposed steep tariffs of up to 50% on many goods, including textiles, jewellery, and machinery, which came into effect from 27 August.

As a result, exports to the US fell nearly 12% to $5.47 billion in September, down from $6.87 billion in August, according to official government data.

Meanwhile, imports from the US rose 11.78% on-year to $3.99 billion, up from $3.6 billion in August.